By Shaina Mishkin
Housing cost concerns, intensified by the war in Iran, hang over the typically busy spring buying season. That makes it an attractive entry point for residential real estate stocks, one analyst says.
Benchmark analyst Michael Rindos, who is also a licensed Realtor, on Wednesday initiated coverage of five residential real estate stocks with Buy ratings. Compass, eXp World Holdings, and Real Brokerage are real estate brokerages. The other two other, Appfolio and Frontdoor, are building management software and home warranty companies, respectively.
The several-year slog for home sales, in part brought about by quickly rising mortgage rates, looked set to improve at the start of 2026, Rindos wrote in a note. Then geopolitical uncertainty sent mortgage rates climbing again.
"With the attack on Iran, that rosy outlook quickly changed to one beset with uncertainty," Rindos says. Still, the Federal Reserve is likely to cut its target rate by 0.5 percentage point by the end of the year, while mortgage rates, despite the recent rise, remain lower than they were one year ago, he says.
After three years of sluggish sales, there's plenty of pent-up demand on the sidelines, while an increase in home inventory could lead to lower prices, which would offset some of the cost pressures of higher mortgage rates, Rindos wrote.
"We continue to see the housing market ready to reset," he says. "Consequently, we view the recent hit in residential real estate equity prices -- many now trading 50% below 52- week highs -- has moved the stocks to attractive levels, creating opportunity if and when the current volatility recedes."
Rindos likes Compass, the nation's largest residential real estate brokerage. It earlier this year completed its purchase of Anywhere, which was the second-largest brokerage by sales volume, according to RealTrends' industry ranking. Corcoran, Century 21, and others are under the Anywhere umbrella. The analyst noted in a disclosure that his real estate license is held by Coldwell Banker, which is among Anywhere's brand names.
He highlights the Compass platform for agents, which streamlines an agent's workflow that would otherwise require several different tools. "While many of these functions are addressed by various tools at other brokers, few setups may be as elegant as this AI empowered system," he writes.
Compass's scale and differentiated strategy for marketing listings are also pluses, he says. "The improved scale allows the company to consolidate office space and infrastructure, allocate R&D [research and development] spending over a larger base of agents, increase the size of its agent referral network, leverage the title and escrow business over a larger agent base, and give its private listings strategy more clout in the marketplace."
Rindos' price target of $14 implies Compass stock has roughly 75% upside from recent levels, based on his 2027 earnings before interest, taxes, depreciation, and amortization, or Ebitda, estimates and an enterprise value-to-Ebitda multiple on par with the S&P 500.
He initiated coverage of eXp with a $8 price target, up from a recent $6.04, also based on 2027 Ebitda expectations. Rindos foresees eXp's revenue rising by 3% in 2026, and expects $68 million in adjusted Ebitda, an increase of over 100%, "highlighting the operating leverage in this business as the number of transactions increase."
He expects quick revenue growth at the Real Brokerage, which he initiated with a price target of $5.50, up from a recent $2.43. Rindos is looking for a 22% increase in revenue, to $2.4 billion this year, with growth continuing in 2027.
The Real Brokerage has no physical offices, the analyst notes. "The firm differentiates itself from other brokers by offering agents a high commission structure with an 85% payout and no monthly fees, a slick integrated platform technology, and Real Wallet, which provides agents some financial flexibility," he says. "The company believes these factors will enable it to add 5,000-10,000 agents per year."
He likes property management software company Appfolio for its recurring revenue from subscribers, double-digit revenue and Ebitda expansion, and relative insulation from disruption by artificial intelligence. Rindos initiated coverage with a price target of $222, up from a recent $158.78.
"Licensing fees are based on the number of rental units under contract with its customers, not the number of humans using the software," he wrote. "Consequently, AppFolio does not appear vulnerable to significant financial pressures related to AI dislocation -- a key differentiator relative to some SaaS stocks that have declined in value recently."
He also likes Frontdoor, which provides home warranties under the "American Home Shield" brand. "The company benefits from balanced or buyers' markets where home warranties are sometimes thrown in by Realtors as a sweetener," Rindos wrote. The analyst's price target, at $80, implies about 35% upside.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
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(END) Dow Jones Newswires
March 26, 2026 11:48 ET (15:48 GMT)
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